The Wilms' tumor protein (WT1) was previously linked to the mesothelial and vascular smooth muscle cell (vSMC) lineage in the mouse intestine, with evidence suggesting that intestinal vSMCs arise from the mesothelium. Here, we report that WT1 is already expressed, unexpectedly, during mouse gastrulation, in cells that specify a population of SMC precursor cells in the lateral plate mesoderm. Tamoxifen-induced genetic lineage tracing of Wt1-expressing cells revealed that vSMC and visceral smooth muscle cells (visSMCs) of the foetal mid-gut, but not mesothelial cells, were labelled after tamoxifen administration at embryonic day (E) 7.5 or E8.5. Analysis of single-cell RNA sequencing datasets of gastrulation-stage mouse embryos and confocal microscopy demonstrated Wt1 expression in epiblast, primitive streak, emerging mesoderm and, from E7.5 onwards, in the lateral plate mesoderm. Co-expression of signature smooth muscle markers in Wt1-expressing cells in gastrulation-stage embryos revealed that vSMC and visSMC fate is specified independently of visceral mesothelium formation. Furthermore, tamoxifen-induced Wt1 knock out at E7.5 affected vascularisation in the E12.5 intestine. Taken together, our study provides previously unknown insights into the developmental lineage of smooth muscle specified by WT1 expression during gastrulation.